Saturday, 23 April 2011

PF Manifesto: Agriculture Development

Agriculture is not only one of the most important economic sectors in the country, but it is also the most politically sensitive. 70% of our people live in rural areas and largely practise farming or fishing. The other reason is that it is heavily connected to the issue of land which inevitably draws in traditional leaders. It’s therefore comes as no surprise that this is the longest section in the PF Manifesto thus far.

What are the main specific policy proposals?

The PF proposals are set out under seven main areas with the following specific elements (a large bulk is unfortunately quite generic):

Crop diversification: Many of the proposals are similar to what already takes place, though PF believes they can be better implemented with greater political commitment. The main new proposal is the commitment to review the Food Reserve Agency (FRA)Act in order to "rationalize its operations and functions".

Agricultural research: PF intends to decentralise research services to sub-provincial level so that local opportunities can be identified and exploited. There are no specific commitments to mainstreaming agricultural education.

Agricultural governance: PF proposes to decentralize agricultural governance to district level, and in particular bring chiefs more formally involved in agriculture production or oversight. There’s also some recognition of the links to land policy development. It is adopting a "wait and see" policy on the question of maintaining the existing two agriculture ministries, preferring to review the situation when in government.

Commercial agriculture: The main specific policy on commercial agriculture is that “the PF government commits itself to a lead time of six months on all major policy decisions affecting key crops”. The PF sees policy uncertainty as the binding constraint for the commercial sector. It also notes that “PF has no intention of “nationalizing” or taking forcible possession of commercial farming land”.

Livestock: There are no specific tangible policies, except in relation to cross border cooperation with neighbouring countries in areas of vaccination and livestock disease control programmes.

Fisheries: PF promises to "streamline the Department of Fisheries in order for it to adequately protect and increase fish stocks and fish species in our rivers and lakes”.

Water resources: The PF intends to “promote the tapping of underground water and construction of dams on streams and rivers for agricultural use”. No specifics beyond that provided.

What is the rationale?

The underlying problems identified in the manifesto can be grouped under four areas:

Government failures: PF believes that a large bulk of the problems in the sector due to misguided government interventions which have either led to rampant inefficiencies. In particular, it notes the “lopsided economic policies of past governments” and the increased politicisation of fertilizer and seed input subsidies. In the maize production this has manifested in Zambia growing “more maize than the nation need in normal years…[and] in other years the drought-prone maize crop fails and there is nothing to replace it with..”

Policy uncertainty: PF believes that biggest obstacle to more rapid growth in agriculture is “the uncertainty about the MMD government’s policies on buying, importing and exporting many products", especially for maize and wheat. This has made it difficult for the private sector to undertake investment decisions.

Lack of access to to the finance. The lack of tenure security and general cost of finance has made it difficult for farmers to undertake productive activities.

Limited knowledge : There’s insufficient knowledge available to farmers, especially those in remote areas. PF sees this as largely a bankruptcy of appropriate farming techniques and necessary research support. It notes that other countries like Brazil have “surged ahead with new technologies that protect soil, reduce reliance on chemical fertilizer and increase yield”.

What is our main assessment?

The PF diagnosis of the key structural problems facing agriculture is spot on. Its characterisation of both the market and government failures shows a deep understanding where things have gone wrong. This should of course come as no surprise because the on-going manifesto analysis shows that PF consistently scores A* for understanding the fundamental problems facing the Zambian people. This should not be underestimated. If the problem is poorly understood the solution will be disastrous and even harmful. PF has demonstrated that it gets it! The next question is whether they have got the solutions to put things right in this area.

There are certainly areas where they have proper solutions. This is particularly the case with respect to research. The PF proposals to increase investment in education and research is welcome. We need to create better educational institution that supports farmers. Statistics show that only 3% of graduates in the higher sectors study agriculture. This is both unsustainable and unacceptable. Further investment is needed to encourage more research and development.

Related to the above is recognition of "market discovery” challenges. It notes the need for local opportunities to be found and exploited. The key constraint facing rural dwellers appears to be knowledge about market opportunities. There are many good opportunities for income creation in rural areas, but locals are just not aware of the opportunities or they struggle with discovering the profitable markets. We have chronicled many on these opportunities including chilli, bees and mushrooms. The list is endless. Although private organisations are doing their bit to unlock the potential that exists, the government can play a more proactive role at the local level working with communities to identify their local assets and solving the coordination and "market discovery" failures that exist. Unlocking these opportunities would make our local areas engines of agriculture growth.

Similarly, it is good to see that PF recognises the challenges associated with finance and that improving tenure security in the long term is vital. However, it is important for them to understand that it will need more than tenure security and we must also remember that land tenure issues take long to resolve. It is therefore vital that concrete plans are put forward on how access to credit for smallholder farmers will be enhanced. We have touched on this issue many times and some progress is being made in this area (see the posts Boosting rural finance; A credit management database for farmers; and, A new Government bank for farmers?)

The issue of finance illustrates a wider problem. Often where PF identifies the problem it is awfully inadequate. This is particularly the case for the problem of policy uncertainty with respect to FRA. The PF solution is to be clear about government announcements, in particularly having a six month deadline for announcements. Surely something more radical is needed! For example, recent literature on the recent failed maize marketing policy provides much better good set of alternative policies, which are built around developing a "rules-based" system.

In general, there’s a strong need for reforming the FRA especially with respect to how it deals with small scale farmers. Small scale farmers have complained that the FRA sets the price too low and thereby discourages small scale farmers from going into maize farming. To make it worse, the FRA apparently rarely pays the farmers on time. The FRA has actually become a negative distortion in its own right, failing to provide the level of certainty in revenue streams that farmers desperately need to invest in more maize and other products. As PF acknowledges, the FRA should be more directly focused on food security, rather than large significant purchases of maize in the market. It might also be good if some food purchases where done through the ZAMACE rather than directly with farmers to reduce price distortions (see Exchanging towards agricultural prosperity). In recent times it has been forced to use ZAMACE, but perhaps going forward this should be a core part of the policy. Eliminating export restrictions would also be made permanent. When the incentives are correct and you have a fully functioning FRA you have nothing to fear. More exports more money in the pockets of rural dwellers to drive growth in other areas. These are the bold ideas one hoped to read from the manifesto!

In addition to the above, some areas are strangely missing. Without taking up too much space one is should not go unmentioned. The need for physical infrastructure provision, especially transport to improve access to markets. We have previously discussed how this remains a key constraint to the developing of agriculture. On Zambian agriculture, income diversification and rural povertywediscuss evidence from FSRP which notes : "Our analysis certainly supports the notion that market access is a key determinant of smallholder income-diversification and growth, and, for peripheral regions, improvements in market access require investments in infrastructure”. On Infrastructure challenges evidence is presented on the abysmal and erratic spending on transport infrastructure.

So what’s the conclusion?

The PF have identified the key problems and have some good solutions. However, once again it seems the solutions part has not been given greater thought. Good intentions won’t solve our agriculture problems. We need well thought out solutions that goes back to the basics – government tackling the market failures, delivering food security and allowing a more open agriculture system where a strong market plays its role.

Zambian Economist is currently reviewing manifestos of leading political parties in Zambia. The Patriotic Front is the first to publish it's manifesto. We hope to review other parties' promises when the manifestos are ready. All posts in this ongoing review can be found at Manifesto Analysis

2 comments:

So basically, what you are saying, is that the PF has "identified" all the problems that the MMD, Government and Donors have already identified and are trying to resolve. The agriculture section of the manifesto is one of the most mundane and unoriginal parts of the whole manifesto. Praising it on any count is a waste of energy and words, in my humble opinion.

It offers nothing new, nothing innovative, and nothing constructively doable in a real world situation.

No that is not what I am saying. I have not reviewed any 'donors' manifestos. Neither have I have reviewed the MMD proposals in this area to understand whether they understand the fundamental problems in the sector.

All I know is based on our economic assessment PF understand the key problems in this sector. But significant problems arise when one examines their solutions, which according to my assessment are below par.

All contributors should follow the basic principles of a productive dialogue: communicate their perspective, ask, comment, respond,and share information and knowledge, but do all this with a positive approach.

This is a friendly website. However, if you feel compelled to comment 'anonymously', you are strongly encouraged to state your location / adopt a unique nick name so that other commentators/readers do not confuse your comments with other individuals also commenting anonymously.

INVESTMENT OPPORTUNITIES

COPYRIGHT

DISCLAIMER

The Zambian Economist is a private website produced and maintained in my own time, and reflects solely my personal opinions. Statements published on the Zambian Economist do not represent the views or policies of employers, friends, family, past or present, or anyone I may or may not be associated with. Any view, opinion or information submitted in the comments section is the sole responsibility of the respective contributor or visitor to the site. These do not in any way represent the views of Zambian Economist nor can I be held responsible for them.